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tv   Countdown  Bloomberg  May 12, 2016 1:00am-2:31am EDT

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♪ night, the dilma rousseff debate drags into another day. we will bring you the very latest on the impeachment vote on the brazilian president. the bank of england vows before the eu referendum. how will the threat of a brexit play into a rate decision? mitsubishi motors confirms it is asnegotiations with nissan, the efficiency scandal terms of the page. set to receive a 50 million euro payoff to end the deal with chelsea, six years earlier. ♪
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a very warm welcome to the program. i am anna and words. just facets :00 year in the u.k. will join us in dubai. the french banking group reporting their numbers, q1 profit at 227 million euros against the estimate of 220 million euros. that number beating estimates on the next level, large customer unit net profit coming in at 163 million euros. cole reportingi that trading revenue fell at the bank began a reorganization to streamline the capital structure. the cost of a rebound, that is also of interest. remember this european banking sector the largest having struggled this year, at record low interest rates, freezing
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income. and turbulent financial markets deterred clients from trading, listing, and other matters. that is something the whole sector has had to deal with. back in february, we heard they were selling stakes in three dozen regional banks in 18 billion euro transaction to simplify the structure, reinforce capital, and pave the way for all caps dividends. ollanta change happening at this particular business. we will see how that one trade at the start of the trading day. lots of earnings of course from the european financial sector. let us get the big one out of the way, the sea meant maker giving us the big numbers, adjusted operating numbers at swiss francs, reconfirming their commitment to the targets announced back in the summer. this is according to my colleagues at bloomberg intelligence. it is still challenged, trying to deliver the target of 1.5 billion swiss francs, a total
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cost-saving by the end of 2017. they're still trying to deliver the savings. it is the world's largest cement maker. they will dispose of assets, notably 3.5 billion swiss francs of assets, including a big piece of the indian business. the operations of the company spread across you under 13 plants and 100 different station. it is a very broad business, concerning the target today. let us move on to german utilities. what we are getting from them, net income at 857 million, ahead of the net number of 863 million that was estimated by analysts. they are confirming the four-year forecasts as well. that is the headline number. remember, prices are the lowest since 2002. as germany shifts to renewable energy, both of those factors squeezing margins in europe's biggest power market. rwi and other rivals, including
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eon, having to put aside of course billions of euros to pay for the country's exit from nuclear power by 2022. the biggest decline are on germany's bench work dax index last year. had to suspend index to common shareholders. a host of earnings out this morning. let us have a look at the broader market picture. will bring up the risk radar. asian stocks have been in decline, concerns about earnings decline in japan and the u.s. reducing the appetite. we have wti, the price of oil pretty stable at $46 21 cents. that is up by 3.5% in the session, dropping u.s. supplies and stockpiles to blame for that. is worth giving an eye on. weakening a touch this morning, toyotas president keeping the pressure on japan, in regards to the currency. saying the days of easy profits are over. dollarcourse versus the
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year today. and the australian dollar in their down around half of a percent really reflective of that lack of risk appetite over 24 hours or so. let us get the bloomberg first word news. we are joined by rishaad salamat from hong kong. rishaad: brazil is slogging towards impeaching president dilma rousseff. debate has gone through the night, meaning the vote itself may not come until around dawn local time. 81 centers voted in favor. she will be suspended and put on impeachment trial. nissan and mitsubishi motors say they are in talks for a possible d theal tied up, ami fuel economy standards. the separate incident on the stock exchange occurred because no decision had been made. people familiar with the matter are seeking a 33% stake in mitsubishi motors. super thursday before the eu
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referendum, all economists in bloomberg say that predict no change to the interest rate. bank of america and merrill lynch say the panel may vote for a rate cut. the quarterly inflation report was cut after governor mark carney was scrutinized by both sides of the brexit debate. that was concern about the vote outcome taking a toll on recent services, manufacturing, and industrial production data. japanese investment appetite for 30 year bonds has made them, in the words of one hedge fund manner for the most expensive on earth. the local say they want more. and more are the only ones with positive yields, leaving investors with little choice what to buy. and the ceo for the capital hedge fund claimed that the japanese thirty-year bond may be the most overpriced security on the face of the air. says he supports donald trump for president. and has backed his call for a
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temporary immigration ban on muslim. speaking in las vegas, he said that the loss, so we can figure out who they are coming in. we have plenty of people here. we have a good economy. most of those coming into the u.s., i do not see that impacting the economy at all. global news each day every day, 2400 journalists working in 115 news bureau around the world. if you are a bloomberg user, discredit top . , think you very much for that. let us take with asia. shery ahn has the data. a little bit sluggish today. anna, that is right. corporate earnings out of japan this morning, not to mention from the u.s. overnight. just gathering sentiment across asia. the nikkei did turn positive just a couple of minutes ago. rising 2/10 of 1%. it was a negative all day. we are see a weakening yen, and
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that is helping exporter outlook there. negative still down for tenths of 1%, reversing five days of gains. the shanghai composite back from the break, for tenths of 1% down. we are still seeing concerns of china, the vice premier saying that economists still face downward pressure. down for tenths of 1%. the causing to be unchanged at the moment, but slightly in negative territory for the second consecutive day. as we continue to see the currency strengthening. it let us take you through some moves, especially in japan because he to keep an eye on the auto sector. mitsubishi motors is unchanged. we are expecting mitsubishi to jump by the limit, when the sets a price on the close, about our there. that is on reports that there is capital tied up talks with nissan, currently down 1.6%. but they are going to hold the
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discussion in the respective board meetings within the day. toyota slumping today after the forecast, annual profits slumped in five years. over in korea, rising the most in a month, after reports and local media saying that tesla has picked the main tire maker hancook. slumping on pressures in the property market, that is as we see rising unsold units. anna? anna: shery ahn in hong kong with the latest on the markets there. let us get to where politics meets markets. been votingate has on impeachment. a vote that may come around dawn local time, could and 13 years by the left-leaning party. and put dilma rousseff on trial. we are joined by our former
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you have bureau chief, been following this marathon debate overnight. this is been going on for some 16 hours or so. when and how might this end? >> it has certainly been a long night for the senators in the long night for the reporters in brasilia. each reporter it 16 minutes. nearly all of them were making use of that 15 minutes. this will not end until sometime after dawn committee 6:00 or 7:00 local time. the senators currently give a speech. they are not casting votes. they are giving an indication of what they are going to do. we are running at about 35% in favor, 14 against. that was as of a few minutes ago. and local papers are saying we may end up with about 53 in favor. they only need a simple majority. they need 41 to start the impeachment trial. as soon as that happens, if the
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vote goes as projected, she would need to stand aside. and i think i just saw and local papers that she spent most of the day to date meeting her aides, cleaning out her office. all indications would seem to be at this point that they will vote in favor of starting an impeachment process, and she wanted to step aside as soon as thursday morning. anna: and what happens next and then for brazil, andrew? it has seen the ratings cut to or companies. what happens next from here? theew: as you pointed out, situation in brazil is not good there. we had this decade of surging commodity prices, endless riches, and that is now gone. in brazil is facing this deep economic slump. this is very much, i think, the start of a new process, the end of anything. beginning, thee
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new president himself has questions about his medical career. there is huge economic challenge, great uncertainty, i think we will have to wait and see. let us start with the day and find out what happens. but there will be a great period of volatility, both economically and politically. anna: andrew, thank you very much. andrew barden there keeping an eye on what is happening overnight in brazil. the debate going into the morning. whend 6:30 local time is we might see some movements, 10:30 here in the u.k.. joining us now, just telling you that toshiba has falling numbers. the tokyo-based conglomerate fourth-quarter numbers coming in, we were expecting a net loss. coming in at 483.2 3 billion yen. interesting to see what they have to do with the westinghouse nuclear power unit. there has been some news around
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that of course the most recent period. toshiba, were they going to do with the forecast to return to profit in the current fiscal year? they are trying to narrow the business, selling medical units to canon. and applying business to china. ofy are in a state of flux, course played by record losses. and after failing years of profits, this is a business very much in flux. they're giving the new forecast today, operating loss. forecastingr 2016, a ¥100 billion net income. lots of news still to come out of the japanese sector. we have that later on. joining us in the studio, c hris, thanks for coming in. let us talk about brazil. this debate going long into the night. we are not asking you to look into the crystal ball. but how should investors prepare
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for what is on the other side of this? chris: we have had a very large rally in the currency, and brazilian stock market. and i think those expectations now are very high. they will be removing, and the looks like it will happen, and as predicted by the various websites tracking the vote, so the question is now, can the vice president step up and do the technocratic thing that needs to be done to get the economy back on track, get government finances back on track. i think the expectation for that is very high. i am hearing people talk about a salvation of agenda. i think we are very wary of the situation, it is would be very complex. anna: the function, currency rankings on the bloomberg, you mention a strong performance we have seen in the brazilian currency. here it is. one theilian currency, best-performing currencies against the u.s. dollar,
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up from the start of this year. is it all in the price, i suppose? if you say expectations are high, the vice president can be more technocratic and deliver big or substantial economic reforms. is it all done? chris: personally, i think it is. i'm not sure that normal investors would have been in there for that ride, that was really a very scary situation. now the situation is a bit less scary. but the price is now that much further up. anna: if we look at some of the other currencies, it is clear we have the brazilian situation politically. but we have a japanese yen in there as well. others playing into that. we have energy-related currencies in there. thenorwegian krone, canadian dollar, the search higher than we have seen in energy prices. that was underlined yesterday. 3.5% higher in wti yesterday.
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an investment strategy based around a rebound in commodity markets that we have seen? chris: we are not. getting back into emerging markets, benefiting commodity prices, we are not doing that. we think that's still the benefits are really on the upswing, the importers of commodities. on a year on year basis, they should show improvements and so on. that will fall away as the year goes on. but i think no, at the moment, is a very volatile environment. particularly a volatile commodity. anna: we ran through a lot of earnings at the start of today show. as we have done all week. chris: i think there is much -- i think it was a difficult quarter. stories there were news
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going into recession, the u.s. going into recession, default sneaking around the world. there were scares of market prices. but now, they have balanced themselves out of it. and so i think it will be a slightly easier second quarter. but this seems to be something, some aspect to weakness in the first quarter that you really do not see in the macro. i think that really is probably the bad environment for confidence. anna: coming from high yields in the u.s.? chris: not just the energy sector, but the other ones. i think it was a market structure problem. anna: chris darbyshire stays with us on the program. let us have a look ahead to the day, here are highlights. 7:45 u.k. time we have inflation data. and a rate decision from the norwegian central bank. stay tuned for our interview with the governor. and we get a policy decision and a rate decision from the bank of
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england. half an hour after that, governor mark carney holds a news conference. they will be based on both sides of the brexit debate. bloomberg users can watch all of it on live go. and u.s. initial jobless claims hitting the bloomberg. and it 9:30 u.k. time, the u.s. second-largest bank, in sao paulo, that is 9:30 london time. up next here on countdown, the world's most expensive bonds. we look at the aspects of superlong date in the land of minus rates. coming up. ♪
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welcome back. 1:21 in the afternoon if you're in hong kong. 7:21 in the morning if you're
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watching in paris or frankfurt. good to be back in hong kong. the hang seng down 4/10 of 1%. the markets in asia a little bit sluggish, getting a boost this morning on the nikkei 225. more on that later. japanese investors appetite for 30 year bonds has made them, and the words of one hedge fund manager, the most expensive on earth. they say they want more. the only ones the nation's with positive yield, leaving investors little choice but to buy the ¥800 billion, a record low auction yield of 0.319%. with us now is chris darbyshire, cio at seven investment. let us turn attention to the bond market. crystal you have to go up to 15 years in the japanese bond market to find anything with a positive yield. yields getting lower and lower
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and lower. central banks the key to the story. chris: in the bond market, it is the most extensive asset class in the world. this is the effects of qe. and what it means is that it sends i think a very bad message to the world, that we are in a growth environment because bond yields are low. they are low because you have a very large buyer distorting the market. anna: and we have a large buyer in japan, some other parts of the developed world. in the united states though, things are little bit different. the conversation is different. i have a chart here that shows the u.s. yield premium over japan. japanese bonds hitting expensive, if you compare u.s. yield premiums over japan. that is what this chart shows. this is something that investors are increasingly trading on, transatlantic or transpacific in this case divide. chris: it is remarkable because u.s. bond yields are not that
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high. i think that we had the fall in the oil price beginning of the year. we have the kind of deflation fear come back, low growth fear. i think people are forgetting there is still inflation out there. and what we are seeing in the u.s. is core inflation taking up fairly consistently, now over the course of a year. course, that outstrips energy and food. what you have left is a broad base and rising prices. that is of some concern you look at charts like that, bond yields being where they are. anna: you think selling the bond portfolio, taking the position in inflation spots. you are preparing for that. chris: this is u.s. inflation oregon the break even expectations have been very low. they seem to be affected by the oil price. even though it is down 30 years, moving in line with the spot oil.
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we think there is an interesting trade there. in a world where there are not that many interesting trades. anna: you mention the chart comparing japan with the u.s. yields, not particularly high either. it seems that where japanese ist is popular, u.s. debt not completely unpopular as well. because u.s. 10 year treasury sales yesterday seeing record sales from indirect bidders. the hunt for yields within the bond market continues. chris: there is not much to offer. i think you are probably feeling pretty insured as a bond investor, by other bond buyers out there. in the u.s. has the fact that money may will flow into the dollar again. it has been quite week recently. but it may turn at some point. anna: this is all at the very forefront of the minds of the businesspeople. this is been a stunning week for u.s. corporate's coming to euro to issue europe denominated debt. easing have the ecb
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policy to the extent that they are, it can be a really cheap place for u.s. company to raise that. chris: absolutely. they had all the benefit of that in the u.s. now that will come to europe and get the same benefit as well. we may very well see u.s. earnings outperforming european earnings. anna: do you see the boj and the ecb continuing this rate. chris: i do not. i think the feedback has been so negative for the markets and the bank themselves. with a negative rate is trying to do is to get corporates to stand. the banks are kind of unintended consequence of that. but i think message needs to change from central banks. you know what, we do have growth. this is not where we wanted to be. anna: interesting in that context that governor kuroda saying they can still ease substantially. their absolutely on the right track, he said. we will see they do anymore. chris darbyshire, cio at seven
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investment, stays with us. the journey on britain's largest brexit debate. we will speak to a man who traveled 30 hours on a british train, gathering votes. ♪
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anna: welcome back. this is countdown. london is 6:30. 7:30 if you're watching in brussels. that is where we find rishaad salamat. rishaad: thanks a lot. brazil senators talking an historic vote regarding the impeachment of dilma rousseff. the decision will not come until around dawn local time. the simple majority says that she will be impeached on the trial. mitsubishi motors says they are in talks with capital ties amid the fuel economy scandal.
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the company is confirming the discussions in separate statements to the tokyo stock exchange. saying that no decision has been made yet. they are seeking a 33% stake in mitsubishi motors. the bank of england holds its last so-called thursday before the eu referendum. they predict no change to the interest rate. bank of america and merrill lynch says one or two of the nine were panel may vote for a rate cut. they reported a news conference with mark carney, where he was scrutinized by both sides of the brexit effect. thinking they had taken a toll on production data. japanese investor appetite for 30 year bonds made in the worst, in one hedge fund manager opinion, the face of the year. withnly ones the nation
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positive yields, leaving investors with little choice to buy. date0 year securities to were at a record low of 1.39%. oil tycoon said he supports donald trump. the president has back his call for a temporary immigration ban on muslims. speaking in las vegas, he says cut them off so we can figure out who they are. there are many of people here. we have a good economy. and muslims coming into the u.s., i do not see that impacting the economy at all. global news powered by 2400 bureauists in 150 news around the world. if you're a bloomberg user you can find all of this at top . back to you guys. anna: thanks very much. rishaad salamat in hong kong. asian equities have come back a little after heading toward a one-month low. nejra joins us with
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disappointing earnings in japan and u.s. : driving some risk aversion in the market. what we see now, with japan getting a little ground, though china is still down. so overall, the msci asia-pacific index off by 2/10 of 1%. still in negative territory, but not as much. asian stocks falling towards that one-month low. if you look at the oil price, this is also halting gains the rally taking a break after it rose to a six-month high yesterday on wti. the gains in the previous session came about on signs of tighter supplies in the u.s. are expected we dropping. you see that on the purple line tracking u.s. crude supply. oklahoma, they actually rose to a record. so seeing that little bit of flattening there in the price after the game, perhaps traders assessing the supply story here with oil.
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and if we just move on to other commodities. looking at metals, a bit of a mixed picture for the london exchange. the white line is copper gaining some 6/10 of 1%. the have seen some losses in led, nickel as well though that has recovered. currencyly, talk about volatility. we are looking ahead to the decision about the bank of england later. anything that mark carney says about brexit will be largely in focus. currencypmorgan volatility. 11%, it is actually poised to drop for the fourth week in five. this is ahead of that boe decision, and the g-7 leaders meeting in japan towards the end of this month. that fx volatility dropping, some traders hoping for new impetus before they make any more big news. anna: thanks very much. let us talk little bit about what is happening in the u.k. at the moment. stocks are trading at multiyear
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lows. we have some breaking news for you before we get to that. we are getting some numbers coming through from the dutch insurance business, impacted by lower outreach equity markets. according to the management, and that has resulted in numbers coming in below market estimates. the net profit at the insurance business is 143 million euros. the estimate was for 328 million. keep an eye on that one. the company blaming lower than average equity markets and increasing, they say, higher earnings from europe. duer earnings from america, to one-time items and lower markets during the quarter. we will keep an eye on that one. now when i was went to you about u.k. markets, stocks are trading at multi-year lows, concerns over a potential brexit. aree rivals on the end faring better to let us take a look at the chart of the hour. manus joins us from dubai. welcome back.
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what you have? manus: good to be back with you. and the pound is the worst performing t10 currency in the world. as a back at those numbers gothic about how hard it is to earn a decent crust in this market. have a look at this. this is your chart of the hour. top,i have for you is the the valuation gap between that, and the 5250, and the smaller cap, those two lines of the bottom. the valuation gap is the wh idest since 2010. the argument is that 5100 companies are globally position, global revenue. therefore, perhaps less potentially bothered by brexit. i will qualify that statement. the small caps, they are at a four-year, versus the 100. it is very much a domestic trade versus the international trade.
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the 100 itself is only down 1.3%. you think of the stoxx 600 down 8.5%. it is a fairly weak backdrop and we go into the brexit discussion on in terms of manufacturing, industrial production. a crawling u.k. valuation gap, and for those people that do not live in london, you need to go and look that up. the periphery of london, and everything north of watford, it changes. manus, thank you greeted let's broaden the conversation about the u.k. a case for britain remaining in the european union, george osborne was speaking for the treasury select committee. george: the claims on the impact of the economy have been supported by the bank of england, the only director of the imf, and every major credible institution in the world. and every one of our allies in
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the world supports the arguments we made about our securities. anna: well, we are exactly six weeks away from the eu referendum. so bloomberg's rodney jefferson decided to travel the length of the u.k. to gauge of extent of them. the 13 hour on britain's largest train began in aberdeen. over 773 miles, 45 stops, and numerous views on why britain should stay in or leave the eu. be surroundedmay the current regulations that the european union, the additional kind of factors, the protection of again. and they kind of act as a mechanism on this country. they kind of pull back the extreme. and i think that is the reason why we should stay in. >> what i object to is the fact
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that we elect people in this country to pass laws on our behalf as governors. but those laws effectively are influenced dramatically by europe. so, the fact that they originate in europe? anna: does the flavor of some of the views that rodney encountered. he joined us from edinburgh. how was the journey? and what do people have to say? we have a couple of examples of the views there. rodney: the journey was obviously pretty long. it is quite it. to get on a train first thing in the morning with some of the commuters going, and not going to scotland and a small town, and ending it with people coming home from 80 an early night out in the southwest of england. view that i got from speaking to people was that there is a lot of be muse meant
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over why we are having this vote at all. we even, when the vote might take place, i think that was one reason they were quite happy to chat with us. as they got on and off, almost the brett of the country really, because they were sort of opening up to the subject, making a decision, they have to figure out how i am going to vote. people, i think that is why, i look at the note of the other day, a lot of them are in the undecided column. which is obviously measuring what opinion polls are showing. manus: rodney, the morning. that is a real question. is there really 19% out there that are undecided? how to use way that? from what you gather, is it too close to call? rodney: that is a good question. i mean, is quite difficult.
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it was a snapshot of a day. rather than it being a, you know, like the pollsters do and take a view of thousands of people, it was a snapshot of a day. and naysayers might say that, trains onle who take a thursday or more likely to stay in the eu then stuck in traffic and scream at the radio. level ofay that the the percentage of people who are undecided is fairly accurate. i mean, the interesting thing for me though, when people said that they were undecided, as up andrt of opened chatted about their views, i think most of them were leaning towards, on that journey, remaining in the eu. which i sort of found interesting with various academic studies that show that
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more undecided people tend to end up staying with the status quo. which also, as one person point out as well, it was really clear that the onus would be on the vote to leave campaign coming the case to leave. rather them for perhaps those people the onus being on the remain side, the government to make the case to stay. so it is trying to convince them to take that leap of faith, that they are better off changing the status quot, and leaving the eu. i use this word be muse musement. they're wondering why we are having this vote at all? anyway, there was a vote that was perhaps something that was not something they were necessarily wanting in the first place. anna: perhaps a high level of
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undecided. it is another thursday. you're not taking another journey today are you? rodney: not today, no. anna: thank you very much. rodney jefferson joining us from edinburgh. the bank of england will hold its last so-called super thursday before the rate. we are joined more by david darbyshire isris still with us. to you.et us talk we are looking ahead to super thursday, the brexit, vote the eu referendum looming large. how much are we going to hear from mark carney and his team today on that subject do you think? david: it is unavoidable. he will have to say something. they will be pressed very hard on it at the press conference, virtually every question be around the referendum. think it willt, i be a very straight act. they don't really want to get sucked in to the politics.
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they're struggling to avoid it. david, let you bring you a chart here. great video of yourself and your colleague, in terms of the forethought for this one. but economic data has not been good on this thursday. the economic surprises, and we have a little bit of a nasty blow. there is a lot of headwind out there. growth is not rocking. david: growth has really come down in the u.k. right now we are tracking not too far above zero. my perspective on that is that most of that is brexit. most of that is uncertainty around the referendum. hiring positions, delayed cap ex. but there is still real discussion to the extent of real acceleration on the outcome of the referendum. i would expect some members to be more dovish today. anna: chris, how does this tie
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into your thinking? manus set this all up with a chart that talks about the divergent with small cap versus the 5100. and to david's point, houses this snapback? chris: since sterling was very weak earlier in the year, look like it might've been brexit at the time. but it may have been more in interest rate expectations falling much more in the u.k. they did in the u.s. and now we have economic weakness. but sterling is actually quite strong at the moment. we are beginning to see that line a bit. my guess is that we have another step down in sterling to come. that is how you protect yourself as a u.k. investor, trying to take foreign currency exposure. as a european or foreign investor, you could probably do it with strategy or. do not take a big nasty, binary risk? manus: gentlemen, question for
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you both, may be some bias to ease on the committee. id, what you think? and then chris? david: they could move to cut. certainly, they like the kind of intellectual argument surrounding, you know, what the second lif half might be. the economy could conceivably need a jolt, under any scenario in the second half of this year. you know, it is not ridiculous. i think it is quite possible. anna: chris, we talk about the impact on stocks. manus talked about the weakening data, data indicating that the economy is slowing. this is actually the chart, services, construction, manufacturing pmi all looking sluggish.
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we had data just yesterday. where in the corporate landscape are you seeing this weakness we have seen in the third quarter falling the hardest? this check the numbers at the top of the hour. you can see the ad market. chris: we expect months for this to go. that step down on the into the chart their will probably fall a bit further. that is likely to be, i think, three sources. foreign investors just not investing. why take that risk? it is businesses doing everything on hold. consumer, probably less so, but flatlining. probably a business investment is a big change. probably holding off as a time being. anna: manus> manus: david, question for you. the big weston is in the market is pricing of fed hike. the market is way behind what is happening with the fed. the market was seem to be way, way, way behind with the bank of
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england wants. that divergence, you think that will begin to close? i'm talking about specifically looking at what is priced in. the market is actually pricing in the probability, 40% from 2016.y, of a cut in david: we have a fork in the road coming up, as far as the referendum is concerned. under that scenario, you could be looking at policy back on the agenda again, spring next year maybe. late this year perhaps. your another scenario, could see an easing of policy. it is not surprising that the market is confused. the bank is confused. very hard to trade all that. very hard have a firm year right now. anna: david, what is going to be key? , you are looking at the vote split if there is any? are you looking for commentary from mark carney and company around brexit? what is going to happen to the market here? chris: the minutes are
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interesting. they would raise headlines, but the commentary around the inclination towards policy after the referendum, any hits on that will be interesting in terms of how the debate will develop. u.k. andid tinsley, european economist. chris darbyshire, thank you to you as well. cio at seven investment management. 6:49 in london. 1:49 in the morning in new york. we are going to be looking for a slight bounce to u.s. stocks at the start of the trade day. perhaps future suggesting up 2/10 of 1%. but atomic it to new york, that is a long way off. and the u.k. fires minister told bloomberg he is very worried that a vote to leave the european union could inspire other members to abandon it,
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too. speaking to francine lacqua, he is confident that it would be made with the situation in greece. >> the situation in greece is slowly improving. the greek government has passed important laws in parliament. there is still disagreement on some details. but i'm confident in light of the european group meeting this week, that progress will be made. and we can complete the first review with greece. i far as brexit is concerned, am very worried about brexit. not only for the immediate damage to the u.k. and the european economy, but also from the fact that is can be taken as an example of leaving europe. let us notuntries, forget that we are witnessing a widespread discontent about european values and strategies. so brexit could lead the way to more painful entanglement of europe. francine: is it a moment? pier: it could be decisive
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moment in european history. francine: a could create shocks? i know that it would impact the city of london. pier: it would impact the european construction. highly integrated in europe, benefits from integration, like all other countries. if brexit happens, if the referendum delivers the decision to leave europe, we will enter a medium-term, several years period of continued stagnation. which on how to disentangle the u.k. from europe, how to disentangle the u.k. we know how we start the we do not know how we end. francine: are you concerned about too much monetary policy in europe not forcing other countries to take more important reforms? pier: it's essentially not true in my country. monetary policy was becoming more supportive.
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the issue is to do more of both, of all policy tools. monetary policy should continue, fiscal policy should be more growth friendly, structural forms should be accelerated. this is true of all countries in europe. of course, my country is doing its share. europe is changing, the world is changing, banking is changing. there are many fundamental structural issues at play. joining us now from frankfurt, we have the chairman of morgan stanley joining us. [laughter] lutz raettig great to have you with us. you are a banker through and through. investment banking across the world, in germany, chair of morgan stanley, as you look at the landscape, deutsche bank retreating, others in flux, how does european banking stand over the next four or five years?
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well, i think we are just starting the conference here in frankfurt called on the move: the future of finance. i think you could say everything is in flux. we have learned a lot of lessons from the financial crisis. we have been busy and repairing bits and pieces. but the aim of stabilizing the system, i think it has been reached. but whether it holds, i think the threat of the next crisis is open. on top of that, i think a lot of changes in our industry, buzzwords, they may change the process. they may change the products. and they will also change, i think, maybe the behavior of consumers and customers. anna: there is been a great
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deal, a big focus on the u.s. this week, some of the trouble that some of the syntactic business of gotten into. i know you'll be talking about that at the conference this week. do you think we need better regulation, different regulation in europe? need differente regulation, and we also need better regulation. at least better harmonized regulation. i think we still have to pay a lot of attention to regulation, not distorting competition. we have to try to get to a level playing field. which is not always easy, also in europe, because of the fact that the economies are different, they have a different history. and also, the banking systems have a different history. they clearly the german banking
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system, as you know from the three pillars, it is quite different in structure. sir, can i ask you, one of the conversations we had was a world of negative interest rate. in germany, it is causing quite a lot of political and social backlash. edge is driving a big w across europe on between the german industry and the rest of the europe continent? lutz: i don't think it cuts a big wedge into our relationship with others. but it is factually and emotionally a very difficult subject, because of the sentiment of consumers, particularly having gone through losing their savings in two wars. now may bewealth,
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discovering that the pension schemes have not been sufficient to kind of comfortably enjoy your pension time. so, i think there is a lot of anxiety in the system. be reallyfar, cannot watered down. and consumers are concerned. they found out that there pension is not enough, or may not be enough, and this of course is a matter of concern. and the big discussion, public debate and private debate, for politicians not still being where they want to be. anna: thank you very much for joining me. lutz raettig, chairman of morgan stanley germany joining us there from frankfurt. manus, still to come on the program, brazil, the debate on dilma rousseff, as they gear up
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for debate that could force her out. equity markets over in the asia session looking sluggish, down 3/10 of a percent. the yen a bit of a focus. our top stories, when we come back. ♪
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manus: apple night. dilma debate drags on for another day. we will bring you the latest on the impeachment vote against the brazilian president. the bank of england prepares for its last super thursday before the eu referendum. how will the threat of a brexit play into the quarterly inflation report and the decision? tie-up talks. mitsubishi confirmed that is in negotiation with nissan as the fuel efficiency scandal turns another page. and getting the boost. adidas said to receive a 50 million euro payoff to end a sponsorship deal six years
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early. welcome to "countdown," i'm manus cranny in dubai. anna: and i'm anna edwards in london. 7:00 year. -- here. a host of companies reporting from the london market; a trading update coming through from itv, the broadcaster in the u.k., third quarter external revenue up. on track for are full-year double-digit revenue profit growth in itv studios. itv says, "good group of pat profit growth, emphasis on the outlook." what do they have to say about advertising trends, about the strength of itv studios? that part of the business
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delivered organic revenue increases in 2015; how much will m&a have to be behind any such drive in 2016? there was a big unknown going into these, and the second quarter includes the european championships, the football tournaments, which can have an impact on the market. aboutrd yesterday concerns that brexit was weighing on the ad market, claiming brexit and associated slowdowns. ad itv goes on to say that they see online payout interactive revenue in "double digits." those are smaller parts of the company, but they are forecasting double-digit full-year growth. so total external revenue up 14%, 755 million pounds. is the telecom operator in the u.k., pretax profit comes in at 40 million pounds. when it comes to guidance, this is where the market will most likely focus.
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they see 2017 as a year of modest revenue growth. 320 million to 360 million pounds. they see a headline revenue decline in the first half of 2017, so a little more guidance from talktalk. the final dividend is at 10.5. they have been involved in the tough data breach, handling that and getting their way through it, and all of the news came a little bit ceo, of guidance on 2017, a nice dividend. the full-year dividend is expected to be at least what you got in the year of 2016. adds wererter, net flat. those are some of the headlines coming from talktalk. how are the future slipping?
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asia, japan, a little bit of a tough time. how are the european markets looking? anna: a tough time in asia -- i just want to type a loose end on itv. they are talking about how they managed to reorient take the business away from advertising as the studio business grows, saying this is against the backdrop of uncertainty in the advertising market, which they have experienced since the debate over brings that began. they're commenting on the brexit debate and the impact it is having on the advertising market. let's get to the futures. the handover from asia is a negative one. it will be sluggish at the start of trade, down by 1/10 of a percent. ftse down 3/10. a little bit of weakness anticipated at the start of the trading day. earnings disappoint in japan and the u.s., really weighing on the asian session. we recap what has happened on a
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few asset classes -- wti near $46 per barrel, pretty flat this morning, but the surprise was yesterday when we saw a drop in u.s. supplies and stockpiles. prices surged wednesday by 3.5%. the dollar-yen as well. the yen is weakening a little bit, but interesting comments from the toyota president, saying the days of easy yen fueled profits are over; japan has to deal with the strength in the japanese currency we saw in the first quarter of this year. and the aussie dollar is a measure of risk appetite, down around half a percent, reflecting that lack of risk appetite this morning. let's get the first word news with rishaad salamat. brazil'swe've got senate slogging towards an historic vote in impeaching the president. the debate went through the night, which means it may not come until morning local time.
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she could be suspended and put on impeachment trial. nissan and mitsubishi say they are in talks for a possible capital tie up in it if you will economies scandal battering japan's automakers. they're confirming discussions in separate statements of the tokyo stock exchange, saying no decision has been made. people familiar with the matter say they are taking a 33% stake. the bank of england is holding its last super thursday before the eu referendum, and today, while all economists predict no change, the bank of america merrill lynch says two of the nine members may vote for a rate cut. the quarterly inflation report will be scrutinized by both sides of the brexit debate. it has taken a toll on recent services, manufacturing, and industrial production data.
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japanese investors appetite for 30 year bond are down. locals say they want more. they're the only ones in the country with positive yields, living investors with -- leaving investors with little choice but to buy. a record low auction yield of 0.319%. tycoon has backed donald trump's call for a temporary immigration ban on muslims. speaking in las vegas, he said, "we've got plenty of people here, a good economy, and muslims coming into the u.s., i don't see that impacting the economy at all." well. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg terminal when you visit top . you.: rishaad, thank
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let's look at the asian markets. shery ahn is standing by. it's all about the autos today. shery: yes. corporate earnings out of japan are having an impact on how markets are trading across asia, but when it comes to the nikkei, it did turn positive in the last hour of trading. though, did not manage to turn positive, staying negative all day, reversing five days of gains. the shanghai composite down 3/10 of 1%, while the hang seng is down for tenths of 1%. a lot of investors are still cautious about the chinese economy, but one thought we have on haseping and e eye been mitsubishi motors because of news of the capital tie up with nissan. and thet trade all day,
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focus -- it jumped more than 16%, as you can see. nissan today feeling the pressure. it fell about 1% at the close. we also have toyota falling more than 1% on that forecast of profits, dropping in more than five years. same with the auto sector and south korea. 3.5%, theck rising most in almost a month after local media reported that tesla picked them as their main tire maker for the model 3. pressureso seeing some on hong kong property developers. fell todayandfil over supply concerns in the property market and pressures on prices. anna: thank you very much. shery ahn in hong kong.
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brazil senate has been discussing the impeachment of dilma rousseff throughout the night. could and 13 years of government by their left-leaning party and see her put on trial. we are joined now by justin kerrigan, who has been following developments overnight in brazil. justin, good to have you on. we talked in the last hour about when and how this is going to end. talk us through how things look now. about 18we've had hours now of deliberations in the brazilian senate. it's about 3:00 a.m., sorry -- 2:00 a.m. in brazilia. they are probably getting very tired. we have had about 39 of the 71 senators who have declared themselves in favor of this impeachment trial going ahead. if that happens, dilma rousseff
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will have to step down. she will make way for the vice over.ent, who will take then we will go through a period of process and trial; it could be a long one or short one, but i think no one is under any illusions now. dilma rousseff is on her last legs, and this is likely to be the day in which she will serve her last hours in office. manus: justin, we cover it from the market's perspective. this is almost like a filibuster, isn't it? if you look at the drama in, let's say, parliament. of the markets -- where do we go from here? they lurch in different directions. brazil has major problems, the credit agencies -- what is your perspective? >> we've been through an
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extraordinary period of market volatility as this whole saga has played out. we have seen the ups and downs and twists and turns of the various figures and characters. they have talked about which way they may go and ultimately now we are reaching this period of the senate vote. the right now we are in a holding pattern -- we saw the rial strength in yesterday, the stock exchange down a little, ets already in japan an increase this morning, which suggests there could be a bounce in the stock market if and when dilma eventually loses the vote. beennderlying story has really of a lot of positive market sentiment. the rial is the best performing currency anywhere in the world. we're seeing a lot of this
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expectation that she will step down, being priced into the market. what happens now is brazil faces very serious challenges ahead until the market reacts. i suspect it will not be quite so favorable going forward, but we shall see. anna: thanks so much for joining us. justin kerrigan with the latest on what's happening in brazil. joining us on set, the head of emerging markets macro at invesco. great to have you. let's tap into your thoughts, then, about brazil. we had a conversation in the last hour about whether the good news -- expectations of fundamental reform -- is that in the price, when you look what happened to the currency? >> i think there is a lot of progress priced in, the brazilian story, besides the impeachment,. is quite interesting and macro terms there has been a besides the--
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impeachment, is quite in macrong and macr terms. the external story is good. the problem is domestic; multiyear recession, very high unemployment, very high inflation, which is only starting to come down and stabilize. change, if itical opens the door, it could bring fiscal adjustment and structural reform, which could make a big difference for the future of brazil. the problem is that with the change, that is when the hard work begins on the macro side. manus: howery going to benchmark the change? good morning, by the way. i have been having conversations saying that these markets could run up hundreds of percent higher. quality want to benchmark with a new regime, in terms of progress? what are you going to the focused on? >> i think the first set of
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things that will happen after the impeachment and vice president takes office is a new economic cabinet. that includes a new central bank governor. i suppose what will take place after that is some change in fiscal and monetary policy, and an effort to change the underlying rules. in the period of the impeachment process, not a lot can happen. he can set things in motion and pave the way. we will be looking for progress on that front. then of course there is this problem that, as they go down the legislative parts of the process, the opposition will try to block all these changes because they are not going to be good for those people who are feeding of the trough of a very large welfare state. one of the challenges in brazil as you have a middle income country, emerging-market, the
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european sized welfare state and tax burden. that is what has to change in the long run. i think it will be quite a lot of political difficulty. despite all the crises they have had, they have never been able to grapple with all of that, and this time, they have in some ways more of a domestic crisis and less of an external crisis. a lot of political challenges. the new president may not have the full legitimacy that such change would require, because he won't have been elected. anna: does that give him a weaker position to do reform? others suggest he will be a technocrat, and that puts them in a stronger position to do reform. you could spin it both ways. >> right. and he has tried to put himself in that position by suggesting he will not run for reelection in the next election, which i suppose will be in 2018. so yes, there is that possibility, but i think it is important that dilma's party
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has an moving in the opposite direction. they will try to block this, and therefore it will be politically complicated. we will see. the short term outlook is positive. manus: want to show you this chart. oil dominates everything i talk about, but it also dominates your special. you have got u.s. production declining, an eia report saying that the world in 28 years, demand will be 120 million barrels per day, more than where we are now. the world needs another saudi arabia in terms of production. how do you square this up? >> i think it is clear that demand for oil is growing in the long run, assuming that we don't have more serious economic headwinds. we have a number of growth headwinds in the world, but assuming that we have financial
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and economic stability, which seems a reasonable proposition, demand will continue to grow. the issue is that we have changed the dynamic of the oil market in every way. there's shale, the geopolitics of oil have changed, and there's the dollar. we may not be in a weak dollar cycle. the strength may have topped out, but we won't be in a cycle where the dollars going down. anna: i want to break in briefly to bring some breaking news to everybody. the majority of brazil senators will back impeachment, according to the brazilian broadcast. brazil senators are still debating. an official vote is still to come. but they are saying that a majority of brazil's senators will back impeachment, which would tie in with market expectations, with the analysis we have been getting, and emerging-market specialists. that would tie in with what had been expected. that news coming -- another
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loose end around mitsubishi. we have had no trading in mitsubishi until the very end of the japanese trading session, and we did see a surgeon the share price, up by 16%. bear in mind, nissan and mitsubishi said they are in talks, including for a possible capital tie up, this amid fuel economy rating scandals that battered one of japan's strongest automakers. mitsubishi did bounce just at the end of the trading day. manus: thank you very much. up next, the world's most expensive bond market -- which one is it? we will take a look at the appetite for super, super long debt in the land of minus rates. ♪
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anna: welcome back, this is "countdown." 144.37 is where we are trading on the pound. on this super thursday. manus: super thursday. it is, i can tell you, already very hot where i am. let's talk about japan, one market on fire. the appetite for 30 year bonds has made them, in the words of one hedge fund manager, the most expensive onerous, and the local say they want more. notes maturing in 15 years or more are the only ones that have got a positive yield, leaving investors little choice but to buy. japan sold almost ¥800 billion of 30 year securities today; record low auction yields,
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0.31%. let's bring in the head of emerging markets at invesco. i want to bring you a chart. this is the premium for bonds in the united states over bonds in japan. years is go beyond 15 a little bit of and ask. we have still got japanese bonds delivering 280 basis points below their american counterparts. this is u.s. over japan. japanese bonds up 23%. of these bond markets are getting out of control, a real jolt on rates, and this whole house of cards, excuse the pun, could come under pressure. >> yes. it is certainly true that we have had a lot of reflation and growth, and the price level is starting to come back up in japan. then bond markets will look expensive starting with japan. i think the underlying issue here is that we have a number of
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persistent overhangs that are imposing deflationary pressure on the world. not have a lot of debt, just in the developed world but also in emerging markets and especially in japan. in the case of japan, we had a significant demographic headwind, a country that is not only a labor force with the population of aging that is shrinking, but it is quite unusual where nominal gdp has been shrinking and real gdp has been rising. the number of people is falling. is a difficult and unusual set of circumstances, and in this world we may flip around and say japan is expensive, or the u.s. is cheap. we are seeing a lot of vistas inflationary pressure. we don't actually think there will be deflation in the united thats, but it is clear there are important and persistent sources of deflationary pressure on the world. one in japan, one in china, one of the eurozone. anna: and do you think we get
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even lower interest rates from the japanese? governor kuroda was this morning saying that they can go as low as the ecb; they can still ease, saying they are "absolutely on the right track." this doesn't sound like a central-bank rethinking its path. >> well, i think there is certainly the possibility of deeper cuts into negative territory, but that policy is somewhat discredited because of the effect of the banking sector, and there is this pressure on the effects of the currency. if you have rates in the negative territory, it works mainly through the exchange rate channel rather than domestic channels. the g-20 hasn't putting a lot of pressure on the u.s. and other countries to avoid that sort of thing and focus on domestic demand. the ecb has done that through credit easing; boj may follow. anna: thank you very much for joining us; good to have you on the program. the head of emerging markets macro at invesco. that will do it for "countdown." "on the move" is up next.
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market looking a bit sluggish at the start of european trading. ♪
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guy: welcome to "on the move." 7:30 in london. we are counting you down to the european open; i'm guy johnson alongside caroline hyde in germany. this is what we are watching. as thelears her desk impeachment debate drags on in it now looksd clear that it will be her last day as president. what next for brazil? nissan and mitsubishi enter talks amid a fuel economy scandal, but will it really be in the driving seat?
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